Every morning, David Huntley checks on the oil tanker traffic outside his home. He can see them cruise up Burrard Inlet from his living room window a few hundred metres above Westridge Marine Terminal, where the Trans Mountain pipeline ends. When I popped by for a visit on June 3, an Aframax called the Tyrrhenian Sea had just docked and was partly visible through a thicket of trees. Last time Huntley saw it here was April 20; since then, it has been to China and back.
Huntley, 88, has penetrating green eyes and a shock of white hair. He’s lived in this cluttered bungalow at the foot of Burnaby Mountain for 41 years. Tankers have been passing below his patio all that time, though it used to be no more than one a week. Now it’s almost once a day — there were 25 in May; 28 in April; 30 in March. “My job got a lot harder once they finished Trans Mountain,” he told me.
Huntley’s “job” is to track the movements of every oil tanker loading up on Canada’s West Coast. He doesn’t rely on his eyes, but on satellites that track the tankers long after they’ve sailed out of sight. That data gets transmitted to a number of tanker-monitoring websites, like vesselfinder.com and marinetraffic.com, which Huntley scours every morning and most nights. He’s been doing this for 10 years — ever since he spotted a tanker sailing by without a tugboat — and keeps meticulous handwritten notes. These make it clear that well over half the bitumen piped through Trans Mountain is now going to Asia, mostly China.
Huntley’s no fan of all this. “Global warming is causing destruction, injury and death,” he told me. “Under other circumstances, those responsible would be charged, convicted and jailed.” But putting that little quibble aside, the view from Huntley’s patio seems like an advertisement for the new pipelines so many in the oil patch are clamouring for. Tidewater, baby: Trans Mountain has both unleashed a production boost in Alberta and diversified the market, a prairie premier’s dream.
But is it? Just as Huntley needs satellites to comprehend the tanker’s movements, to really understand what Trans Mountain is telling us about the need for new pipelines, you need to look closely at the numbers — in particular, the money. When you do that, the dream becomes a financial nightmare.
Huntley, 88, uses websites that track the global movements of oil tankers to maintain his handwritten ledger on the origin and destination of every tanker that fills up with Trans Mountain bitumen. Photo by Arno Kopecky/Canada's National Observer
Permanently over-budget
“Trans Mountain is definitely losing money,” says Tom Gunton, a professor of resource and environmental management at Simon Fraser University who has been following Trans Mountain closely for years.
Not just a bit of money, either. According to Gunton’s calculations, spelled out in a recent report he published for the International Institute for Sustainable Development, Canadian taxpayers stand to lose between $9 billion and $19 billion from Trans Mountain, putting it among the largest oil subsidies in the world.
Most Canadians are well aware of how dramatically over-budget Trans Mountain became. From an initial estimate of $5.4 billion, the final price tag came in over $34 billion. Analysts have been asking ever since how the government expects to get that back. “There’s no way anyone will pay the full cost of this pipeline,” Rory Johnston, an energy researcher and founder of the Commodity Context newsletter, told CBC in April 2024, when construction was completed. “You’re going to need to take a haircut of at least 50 per cent of this pipeline.” So far, the government has avoided that haircut by not selling. We own the asset and the debt, as income from the project starts to trickle in.
What the average voter may not appreciate, though, is just how meager that trickle is, and why: the oil companies who are now shipping their product on Trans Mountain were given a sweetheart deal based on that initial price estimate.
Oil producers pay a per-barrel toll to pipeline companies. Just like Bell charging for data that passes through its cell towers, the tolls are how the pipeline company recovers its construction and operation costs, plus the return on investment. The toll rate is usually a function of the project’s cost — at least that’s how it works in the private sector. But Trans Mountain is a Crown corporation owned by taxpayers and built with political rather than economic imperatives in mind. Such was our government’s zeal to make it operational that Trans Mountain locked in its customers’ toll rates years before the project’s full cost came into view. As a result, oil producers are paying just over $11 per barrel to use Trans Mountain. That’s roughly half of what would be required just to break even, leaving the Canadian taxpayers who own Trans Mountain with the prospect of billions in debt. The only real question is, how many billions will that be?
Close-up view of the Trans Alaskan Pipeline, viewpoint from Delta Junction Viewpoint along the Richardson Highway. Photo by Shutterstock
“There's nowhere else in the world where the taxpayers are subsidizing the transportation costs of the oil sector,” Gunton notes. “It just doesn't make any sense. They're a profitable industry, and historically they paid for their own transportation to market, as they should. So Trans Mountain is unprecedented — unprecedented in building a project where half the capital costs are not even included in the rate base for determining tolls.”
Astonishingly, the deal isn’t even that great for oil producers.
“Even with the subsidized tolls on the pipeline, it actually costs more to ship on Trans Mountain over to China than it does shipping on Enbridge's system down to the Gulf,” Gunton says. That helps explain why the pipeline still isn’t operating at capacity. One year after it started operating, the pipeline is just over 80 per cent full; the only companies using it are the ones who signed shipping contracts before construction began.
Now those companies are trying to get the toll lowered further still — Trans Mountain and its clients are locked in a complex dispute currently before the Canada Energy Regulator (CER), though a decision in the years-long case isn’t expected before 2026. In response to a query about whether the Crown corporation expects to recoup the $34.5 billion it spent on the project, and how long that could take based on current toll rates, a spokesperson for Trans Mountain wrote by email: “The Trans Mountain pipeline system is a long-life asset. The tolls for service on the pipeline are approved by the CER and provide for a return (on) the invested capital over the life of the asset.”
Perhaps worst of all, Trans Mountain has failed to alleviate the discount on Canadian heavy oil that was such a big reason for its construction: Alberta bitumen sells for less in American markets than American oil, and leaders in the oil patch along with prairie premiers have long claimed this is because Canadians only have one buyer. But the discount actually got worse in the months immediately after Trans Mountain started operating; one year later, it remains worse than it was in 2020. That’s not because we need more pipelines. It’s because bitumen is an inferior quality of oil, costing more to refine. Americans aren’t alone in paying less for it.
“China is not going to pay a premium for oil over the US,” Gunton says, “and if they do, then the Middle East is going to ship more oil there, and other producers will ship more oil to China to smooth out those prices. You do get short-term bottlenecks here and there, but over time the price of oil is essentially equalized in all the destination markets, because people move oil around by tanker to take advantage of these price differences. And by doing that, they smooth them out.”
In the meantime, oil producers looking for ways to transport their product won’t need a new pipeline any time soon. On top of Trans Mountain’s spare capacity, Enbridge is about to add two new pipelines’ worth of transport capacity to its existing grid, simply by improving efficiency. At an Investor Day presentation in March, Colin Gruendig, Enbridge’s executive vice president and president of liquid pipelines, announced plans for one million additional barrels per day of capacity by 2035 — twice the Trans Mountain expansion’s volume, in less time than TMX took to build.
No interest from business
Granted, none of Enbridge’s pipelines lead to an ocean. But even that Trans Mountain advantage may prove fleeting, with Chinese demand for oil set to begin dropping soon. China is leading the world’s energy transition, with over half its vehicle sales already in EVs, and many of its neighbours are following suit.
“The Asian [oil] market is not going to grow,” Gunton says, adding that Canadian bitumen — which costs a lot to produce, and yet more to refine — must compete with cheap Middle Eastern oil for those dwindling Asian markets. “Right now, the Middle East has about five million barrels of unused capacity just sitting there that they can turn on tomorrow, if they want, at very low cost. So, in this environment, I don't think any rational investor is going to bet on building a major new pipeline.”
No businesses are either. For all the talk from premiers like Danielle Smith, there isn’t a single proposal from a company that actually builds pipelines to do so today.
So if the best-case scenario for a new pipeline is so bleak, why are so many in the oil patch clamouring for one?
“I think they see this as an opportunity to again get the government to subsidize transportation costs for them,” says Tom Gunton. “Because the only way you can build a new pipeline is if the government significantly subsidizes it.”
British Columbians, at least, can take some solace in the fact that our provincial government has vocally opposed any talk of building new oil pipelines to the West Coast (although the province does seem open to dredging Burrard Inlet to expand Trans Mountain’s tanker capacity). But Carney is still playing footsie with the rest of Canada’s premiers on this subject. And in the prime minister’s eagerness to turn Canada into an “energy superpower” by advancing major projects through Bill C-5 (the “One Canadian Economy Act” now making its way through parliament), the oil patch clearly smells an opportunity — not just for more federal subsidies, but less regulation too.
A familiar approach
“Any new pipeline project would require careful consideration and real provincial and federal legislative change,” wrote an Enbridge spokesperson in reply to my query about whether Canada’s biggest pipeline company saw a business case for building a new pipeline anywhere in Canada right now. “This includes identifying energy projects as being in the national interest, implementing globally competitive energy and carbon policies, simplifying regulation, reducing regulatory timelines and a robust Indigenous loan guarantee program.”
Most of that answer is contained in two words — “simplifying regulation” — which is exactly what the One Canadian Economy Act proposes to do. Unfortunately for this approach, it’s already been tried. Under Stephen Harper’s Conservative government, the approval process for pipelines and other major projects was dramatically streamlined, with environmental assessment and other regulations rolled into a one-stop shop called the Joint Review Panel. That JRP approved the Northern Gateway Pipeline proposal, as well as the Trans Mountain expansion, only to have both decisions overturned by a federal court. The Northern Gateway never recovered, in part because Indigenous opposition and the coastal environment made that project so much more tenuous. Trans Mountain only survived by scrambling to conduct the environmental assessment it hoped to skip (the JRP had initially decided against considering the environmental impacts of a seven-fold increase in tanker traffic; it never did consider climate impacts of the increased oil production). Ultimately, the supposed streamlining of the JRP wound up delaying construction instead, thus contributing to Trans Mountain’s massive cost overruns.
“Harper was like, ‘our regulatory system has too much red tape, we’re not getting decisions fast enough, and we want to be an energy superpower,’” recalls Eugene Kung, a lawyer with West Coast Environmental Law who has been involved in court battles with both Northern Gateway and Trans Mountain. “Tell me if that sounds familiar.”
Comments
This analysis sounds very accurate and informative to me. Why is this information not widely published in print and electronic media? Is there someone (big company) paying media not to publish it?
Could some crowd funding amass sufficient money to pay the media to publish that? I am willing to contribute.
I love this: "Is there someone (big company) paying media not to publish it."
There is, in fact, a consortium of big companies trying to convince us that black is white and vice versa. It's called Pathways Alliance. They claim they're going to become 'net zero' or something like that but when you look at their arithmetic you find that they're not counting the 'scope 3' emissions created when their product is burned in ICE car engines.
This is blatant B.S. When MP Charlie Angus managed to have the regulations changed to say that these companies had to become truthful, there was a hasty scrubbing of websites and a hue and cry about how unfair it is to ask them to be truthful.
Pathways Alliance will not reach "net zero" even on their own upstream (Scope 1) emissions. Precisely what their commitment to net-zero by 2050 refers to.
It's true that downstream emissions generated by consumers at the point of combustion (included in Scope 3) account for 80-90% of the emissions from a barrel of oil. But what matters to Canada's climate targets is the O&G industry's Scope 1 emissions.
The O&G industry is the biggest single GHG emissions source in the Canadian economy (c 30% of the national total). Canada cannot reach its climate targets as long as the O&G industry continues to expand.
There is no practical way — and certainly no economical way — for the O&G industry to capture anything but a small fraction of its own upstream emissions. The greenhouse gas stream flows are too many, too spread out, not susceptible to carbon capture (e.g., oilsands mines, tailings ponds), or low concentration.
If the O&G industry could capture all of its own Scope 1 emissions, that would still leave its far greater Scope 3 emissions. But they cannot even do that.
Scope 1 emissions are from the fossil fuels that companies burn directly.
Scope 2 emissions are the emissions from producing the energy companies use. The indirect emissions from the generation of purchased energy, including electricity, steam, heating, and cooling.
Scope 3 emissions are all other indirect emissions that occur in the company's value chain (the business activities it takes to create a product from start to finish: from a company's suppliers to its customers), upstream and downstream. Scope 3 emissions are the emissions both above (supply chains) and below the company in the chain (consumers).
Mainstream media has been enforcing a law of silence of sorts on the Fossil Fuel industries for decades now.....which is one reason why we shouldn't be too hard on Trump when he calls the MSM FAKE NEWS. He knows whereof he speaks....though usually, its in what they don't say...and they way they misuse words........like 'Israel has a right to defend itself...when Israel has just unilaterally bombed another sovereign country'........that they twist reality into various shapes of the 'half truth'.
In the glorious west, most journalists know which side they should be on.
Looking at the big picture, Canada's oil industry argues that the reduced price differential, increasing tax revenues, and provincial royalties more than offset the losses from the pipeline. I.e., we should not consider the business case for the pipeline in isolation but in the context of the entire industry upstream that feeds it.
In that sense, TMX is a loss leader. Taxpayers take a bath on TMX, but come out on top when growing revenues from the higher prices on expanded production are taken into account.
Kopecky: "Perhaps worst of all, Trans Mountain has failed to alleviate the discount on Canadian heavy oil that was such a big reason for its construction …"
Several sources suggest otherwise:
"The expanded Trans Mountain is already adding value to the country by allowing production to grow.
"Canadian oil exports outside of the U.S. have increased to about 6.5 per cent, up from 2.5 per cent, since May, while the price differential on Western Canadian Select heavy oil dropped by about US$7 per barrel, according to a new report by Alberta Central chief economist Charles St-Arnaud.
"He estimates the smaller discount increased oil revenues in Canada by about $10 billion last year."
"Varcoe: Trans Mountain eyes capacity increase, expects to move more oil abroad if U.S. tariffs hit" (Calgary Herald, Jan 17, 2025)
"Trans Mountain expansion has delivered so far on some profitable promises, report suggests' (CBC, Jan 23, 2025)
"A recently released report compiled by a local economist suggests the oil sector is already seeing some of the promised benefits from the contentious Trans Mountain Pipeline expansion just six months after its completion.
"Calgary-based Charles St-Arnaud, chief economist with Alberta Central, says expanding the pipeline has reduced the price differential between the Canadian price of oil — known as Western Canada Select (WCS) — and the U.S. benchmark price, West Texas Intermediate (WTI).
"According to his report, that gap narrowed by about $8 US per barrel at the tail end of 2024. He says this is much lower than previous years, and that narrowing the spread is a good sign for Alberta's economy.
"'When we look at the sum of how much revenue that could be valued, it's about $10 billion Cdn in extra revenue,' said St-Arnaud.
"'It's like if suddenly we had a 13th month of production in 2024. So it's a decent increase in revenue, and it matters because we're in a province where a lot of our fiscal revenues depend on royalties from oil and gas.'"
Energy and Natural Resources Minister Jonathan Wilkinson: On the economic side, “the estimates are that it's $10 billion a year that actually is accruing to Alberta, and through Alberta to other parts of the country, that otherwise would not have been captured. That's $10 billion a year for every year that that pipeline operates. Anybody who says that it's not a good economic proposition for Canada doesn't know what they're talking about.”
"Opposition parties call for ‘full transparency’ following new Trans Mountain commitment" (National Observer, February 13, 2025)
"One year after the Trans Mountain Pipeline expansion, why isn't it full?" (CBC, May 03, 2025)
"Since the pipeline opened, the price differential between Canadian and U.S. crude oil has also narrowed, lately falling to under $10 a barrel, down from around $18 to $20 a barrel in the past decade. Canadian producers tend to fetch a cheaper price for their oil because it's heavier and harder to refine, but having access to more diverse markets has helped reduce the discount on Canadian oil.
"'That's huge,' said Trevor Tombe, economics professor at the University of Calgary.
"For every dollar the differential shrinks, Tombe said, the Alberta government recoups about $740 million in revenue, which also translates to indirect economic benefits for the rest of Canada.
"And while many have debated whether it was worth it for Ottawa to buy the pipeline, Tombe said one of the more important metrics is whether it will be used for another two decades.
"If so, he said, then tolls can not only cover its costs, but can also help repay a lot of the debt used to build it in the first place.
"'So financially as a project, it will continue to make sense,' said Tombe, who said he believes the pipeline will be used even beyond 2040."
"Ottawa may not want to get out of the pipeline business just yet: Trans Mountain CEO" (Calgary Herald, May 02, 2025)
"That access to new markets and the additional pipeline capacity, analysts say, has been key to stabilizing prices for Canada’s benchmark heavy crude, Western Canadian Select (WCS), and increasing returns for producers and taxes and royalties for governments.
"WCS, which is a heavy oil with a higher sulphur content, is considered a lower-quality crude and it trades at a discount to light oils such as West Texas Intermediate (WTI). For much of the previous decade, whenever Canadian production would outstrip export pipeline capacity, there would be a glut of landlocked heavy barrels in Western Canada that would lead to prices cratering.
"But since TMX entered service early in 2024, the WCS-WTI differential has fluctuated in a relatively tight band between $12.50 and $16.50 per barrel, even as Canadian production has risen to new records, according to S&P Global Commodity Insights, compared to $18/bbl for much of the last decade.
"The differential was around $20/bbl in 2022 and 2023, but hit $45/bbl after one particularly nasty pipeline bottleneck-induced blowout in 2018.
"Now, despite rising trade tensions and market uncertainty putting downward pressure on oil prices, average daily oil production from Alberta was up more than five per cent in the first quarter, likely due to the additional capacity provided by the still-not-full TMX pipeline, according to ATB Capital Markets."
…. In which case that 10 billion$ per year should be used to pay for the pipeline, and the damage resulting from its contribution to global warming.
I would add that this project, to my knowledge, was never required to provide bonding / surety for performance, materials, labour or risk. Most projects in the real world at lower levels (provincial, municipal or private) never get approved without a risk manager reviewing said bonding for accuracy and adequacy. You'd be suprised how many contractors bidding on public projects do not meet these basic requirements and have to scramble to get them in place before winning the bid.
Then again, we've never seen a business case or risk assessment for TMX before or after construction. What we did see were grossly childish fudged numbers and meaningless aspirational comments ("diversified markets, eliminating the US discount," etc.) presented by CAPP and pro oil proponents.
Bonding for major oil spill damage in the international waters of the Salish Sea? Queue the laughter and mockery from Alberta. Probably the only thing that will shut the Alberta O&G crowd up is being sued for 50 or 60 billion bucks by BC and Washington state and an untold number of cities and marine businesses and coastal First Nations for losses and damage from a big spill in Boundary Pass.
Silence from Alberta? Hard to imagine.
I hope everyone understands that the government made $14.7 billion go “poof” by converting this much “debt” to “equity”. See the first article above under ‘Keep Reading’. This is dishonest. No ordinary company would be able to do that. This equity currently has a value of zero, and is likely to remain that way indefinitely.
Not a single independently auditable business case in sight. Not one analysis of long-term demand for heavy oil (and LNG) in Asian markets. Not a single professional risk assessment (financial or environmental) presented, especially for the complex Pacific coast marine ecosystems and economy. Not one policy that addresses tailpipe emissions.
Mark Carney, pay attention to this highly flawed process where your voters are hung up on the clothesline and exposed to every change and circumstance imaginable. And for what? To appease the loudmouths in Alberta and the CPC?
Otherwise, politics will be our downfall.
Build out the national electrical grid instead. Electrify the railways, road transportation and energy for buildings. These will profit all of Canada in every imaginable way, not just one or two provinces at the expense of everyone else. The benefits of widespread electrification are not possible with fossil fuel infrastructure and assets that are heading for a plateau and decline already occurring in Canada's oil and gas export markets.
AB wrote: "To appease the loudmouths in Alberta and the CPC?"
The scope of the problem extends well beyond Alberta, Big Oil, and the CPC.
We are also talking about Big Finance. The Big Banks, insurance companies, and pension funds that back the O&G industry. Big Money.
The Business Council of Canada & The Canadian Federation of Independent Business. Corporate Canada, in short.
The Liberal Party's prime constituency.
The Liberal Party is Corporate Canada's front office.
"A 2023 report from the University of Toronto found that in 2022, Bay Street-based financial institutions were responsible for financing 1.44 billion tonnes of carbon dioxide equivalent. As the study explains, if Bay Street were a country, it would be equivalent to the fifth-largest polluter in the world, behind only China, the US, Russia and Japan."
"Toronto financial institutions must do more to advance the energy transition" (National Observer, June 10, 2025)
>>...climate change has already altered the frequency and severity of extreme weather, rendering historical data an increasingly unreliable guide. When insurers finally recognise this reality – often after suffering major losses in a catastrophic event – they tend to overcorrect, either by sharply increasing premiums or withdrawing coverage entirely.
This pattern is playing out in many places although in different ways. In highly insured economies, insurers retreat from climate-exposed regions and raise premiums at inflation-beating rates. In emerging and lower-income economies, the persistently high “protection gap” between insured and total losses continues to leave communities financially unprotected and governments exposed to devastating financial impacts.
For insurance regulators these dynamics should be a red flag, suggesting they should reassess how they oversee the industry because insurance companies are exposed to climate risks on two fronts.
First, from the financial impact of ever-increasing extreme weather risks (witness the recent devastating hurricanes in the Gulf of Mexico and floods in many parts of Europe). Second, from the investments these companies make in the fossil fuel industry, one of the principal drivers of climate change. In effect, insurance companies are amplifying those climate risks that are now bearing down on them; regulators should take steps to break this doom loop. <<
https://greencentralbanking.com/2024/12/10/increasing-climate-change-lo…
Doom Loop. There's new term for you. ;-)
As for the LPC, here's a link to Mark Carney's 2015 speech at Lloyd's of London "Breaking the tragedy of the horizon - climate change and financial stability" to the finance and insurance industries of the UK when he was the governor of the Bank of England.
Will he backslide into carbon futures? Words are words, and deeds are deeds. I'll judge Carney's Libs on their deeds, knowing that words give clues to action. If pipelines rue the day over electrification with renewables (these are actual on-the-ground projects, not just wordy policies subject to court challenges and amendments), then Carney's Libs will be deemed major backsliders and two-faced hucksters practicing crisis capitalism, even after a decade of Carney's demonstrative climate awareness and philosophical policy slant in words prior to politics.
But note that there is one huge roadblock to carte blanche pipeline ramming, and that's Indigenous resistance backed by powerful legal rights defined in the Constitution. They killed Northern Gateway, and we can only hope they will have the resources to fight pipelines across the land if it actually comes to a copy cat Poilievre narrative to push them in all directions.
Like I said, politics has the ability to wreck everything and, in some rare cases, to elevate good over evil. It's deeds that will lay out the course for the future.
Mark Carney 2015:
https://www.youtube.com/watch?v=V5c-eqNxeSQ
In other words, one more stupid boondoggle that the country doesn't need, the climate can't afford, and the bitumen industry isn't going to be able to fill to capacity.........as Asia moves to clean grids and electric vehicles....and the dirtiest most expensive to extract and refine fossil fuel fights for its life.
If Carney succeeds in signing us up for one more fossil fool pipeline...it won't result in Canada becoming an energy superpower, it will be just another nail in the coffin of a liveable planet. And for what???
We have all the sun, wind and geothermal we need to create a national clean smart grid....and all the rare earth minerals we need to fuel the real just transition. Sure PP taught us to hate Trudeau for imagining that future, inspite of him buying the TMX for his fossil fuel backers....
But doubling down on old extinction technologies that don't pay??? Are Canadians that gullible?